Rising rents and utility payments are boosting curiosity in smaller, cheaper rental properties on the expense of bigger, dearer homes within the UK, in accordance with analysis from the property portal Zoopla.
The information, revealed on Tuesday, confirmed that 35.4 per cent of inquiries to property brokers about properties in July and August this 12 months have been about two-bedroom flats, up from 29.8 per cent in 2020.
In the identical two months, the proportion of inquiries about three-bedroom homes was 12.1 per cent, down from 15.9 per cent in 2020.
Richard Donnell, Zoopla’s government director of analysis, mentioned rents had “surged forward” over the previous 12 months, though there have been indicators that the tempo of progress was peaking.
“Renters are responding and in search of smaller, higher value-for-money properties to hire with an eye fixed on power prices as a lot as rental ranges,” he mentioned.
Zoopla mentioned that, on common, the quantity of gasoline wanted to warmth a purpose-built two-bedroom flat for a 12 months was 40 per cent decrease than for a terraced home. The determine for a flat conversion was 25 per cent decrease.
In July and August, the variety of properties obtainable for hire was 46 per cent decrease than the five-year common determine, whereas the variety of inquiries about properties was greater than double the five-year common.
This imbalance helped push the speed of hire rises as much as an annual fee of 12.3 per cent for the 12 months to July, in accordance with Zoopla. The corresponding determine a 12 months earlier was working at simply 2 per cent.
Donnell mentioned the rental market wanted extra new properties for hire to counteract the upward pressures on costs, including: “Higher regulation has seen much less new funding and a small however rising variety of landlords promoting up, which means the rental market has stopped rising since 2016.”
Zoopla mentioned common rents for all properties had risen by £115 from final 12 months’s common stage of £1,051 a month. That determine represented 34.4 per cent of the typical earnings of a single renter, it added.
The rises have been significantly sharp within the greatest city areas. On common, rents in London rose 17.8 per cent within the 12 months to July. In the identical interval, they elevated by 15.5 per cent in Manchester and 14.4 per cent in Glasgow.
Development was slowest in north-east England, the place the rise was 7.6 per cent.
Zoopla predicted, although, that rental progress would sluggish from its present ranges within the final quarter of 2022 and subsequent 12 months.
Its analysis is the newest proof of the fast rise within the UK’s housing prices due to a mismatch of provide and demand. Many buy-to-let landlords have offered properties for the reason that onset of the coronavirus pandemic to scale back their publicity to the sector.
There have additionally been indications that landlords are promoting properties to keep away from more and more stringent regulation. Such measures embrace a plan, introduced final week by the Scottish authorities, to freeze rents in each the personal and social housing rental markets.
Donnell mentioned there was a danger that extra regulation to enhance requirements or maintain again rental progress would compound the provision drawback.
“Policymakers must tread a cautious path between defending shoppers and guaranteeing an honest provide of properties for hire,” he mentioned.
Polly Neate, chief government of Shelter, the homelessness charity, mentioned personal renters throughout the nation have been battling “more and more unaffordable” personal rents.
“An absence of inexpensive properties means competitors for brand new leases is fierce,” mentioned Neate. “It’s no surprise tenants are being priced out of their native space or compelled into cramped one-bed flats simply to discover a new residence.”